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Chapter 5: QA5C-4E (page 249)

Question: Journalize the following sales transactions for Austin Mall. Assume Austin Mall uses the gross method to record sales revenue. Explanations are not required.

Jan. 4 Sold \(10,000 of antiques on account, credit terms are 1/15, n/30. Cost of goods is \)5,000.

20 Austin Mall received payment from the customer on the amount due from Jan. 4.

20 Sold \(5,200 of antiques on account, credit terms are 1/10, n/45, FOB destination. Cost of goods is \)2,600.

20 Austin Mall paid $120 on freight out.

29 Received payment from the customer on the amount due from Jan. 20, less the discount.

Short Answer

Expert verified

Answer

The total of debits and credits is$38,120.

Step by step solution

01

Meaning of Transaction

The occurrence of any event in the business is called a transaction in accounting terms. A transaction must be measurable in monetary terms to be recorded in the books of accounts because accounting records onlyfinancial transactions according to themoney measurement principle.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Jan 4

Accounts receivable

10,000

Sales revenue

10,000

Jan 4

Cost of goods sold

5,000

Merchandise inventory

5,000

Jan 20

Cash

10,000

Accounts receivable

10,000

Jan 20

Accounts receivable

5,200

Sales revenue

5,200

Jan 20

Cost of goods sold

2,600

Merchandise inventory

2,600

Jan 20

Delivery expense

120

Cash

120

Jan 29

Cash

5,148

Sales discount (5200*1%)

52

Accounts receivable

5,200

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Most popular questions from this chapter

Describe the multi-step income statement.

Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually ships inventory to customers approximately one week after receiving the order. For orders received late in December, Kathy Dobbs, the owner, decides when to ship the goods. If profits are already at an acceptable level, Dobbs delays shipment until January. If profits for the current year are lagging behind expectations, Dobbs ships the goods during December.

Requirements

1. Under Dobbs’s FOB policy, when should the company record a sale?

2. Do you approve or disapprove of Dobbs’s manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason. If you disapprove, identify a better way to decide when to ship goods. (There is no accounting rule against Dobbs’s practice.)

What are the two types of merchandisers? How do they differ?

Journalize the following sales transactions for Sanborn Camera Store using the periodic inventory system. Explanations are not required.

Dec. 3, Sanborn sold $41,900 of camera equipment on the account; credit terms are 3/15, n/EOM.

17 Sanborn receives payment from the customer on the amount due to less the discount.

D & T Printing Supplies’ accounting records include the following accounts at December 31, 2018.

Purchases \( 185,200 Accumulated Depreciation—Building \) 21,000

Accounts Payable 7,700 Cash 18,100

Rent Expense 8,600 Sales Revenue 257,800

Building 42,800 Depreciation Expense—Building 4,700

Common Stock 55,000 Dividends 26,500

Retained Earnings 30,400 Interest Expense 1,900

Merchandise Inventory,

Beginning 119,000 Merchandise Inventory,

Ending 102,100

Notes Payable 11,300 Purchase Returns and Allowances 20,700

Purchase Discounts 2,900

Requirements

1. Journalize the required closing entries for D & T Printing Supplies assuming that D & T uses the periodic inventory system.

2. Determine the ending balance in the Retained Earnings account.
See all solutions

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